Veteran biotech investor talks of new reality

That shouldn’t come as a surprise. Kinsella’s father was the Broadway and TV actor Walter Kinsella, a regular on “Alfred Hitchcock Presents” and “The Honeymooners.” Downstairs is the screening room (103-inch thin-screen Panasonic).

Across the hall is a 9,000-bottle wine cellar, temperature-controlled at 50 degrees. Kinsella Estates Winery makes a cabernet sauvignon, $100 a bottle (get it at Pamplemousse), and he’s flying up to Healdsburg in Sonoma County for a tasting later in the week, before Madrid, for the art, and London, to check on a new musical “Matilda,” back through New York, more shows. He’s a Tony voter.

The building used to be the Copley Library. Now it’s the Kinsella Library, and some might view this as a changing of the guard, from media empire to the new riches of biotech and social networking. The entrance foyer is still the same, floored with bricks from the Springfield railway station where Abraham Lincoln first boarded the train to Washington for his 1861 inaugural.

I ask how picking a future hit musical is like picking a winning startup. Kinsella has been answering this question most of his life. “For a variety of reasons, liking a musical is different than liking a social network company,” he says, “but at the end of the day it’s just your gut decision whether or not, at this point in time, are all the threads coming together and resonating with you? Is this something that you’re going to risk your money on or not?”

How do you compare biotech and tech investing?

“Nothing could be more expensive than getting a drug approved. Nothing could be cheaper than to start an Internet company. If you’re talking about therapeutics-based biotech, since that’s where all the money is, then every idea is a big idea.

“If you can cure even an orphan disease, like Meniere’s, Lou Gehrig’s or the lysosomal storage diseases, then there’s hundreds of millions, if not billions of dollars, of market value in solving the problem.

“If you’re talking the Internet, every idea is a small idea until proven otherwise,” and you scale from tens of thousands of users to tens of millions of users, “which must be done in an economically sensible way” — not like Groupon, he points out.

The life span of an average venture capital fund is 10 years. In the aggregate, Avalon’s several current funds hold $700 million.

“We invest, as soon as we close. We put all our money in the ground by three years and then by five or six years, we have to start looking for exits. We obviously need to return capital to our partners who are looking for an above-average multiple on their capital.

“So it’s a short time frame to accomplish things, and even if it’s a great idea, if we don’t think we can get significant inflection point of value appreciation within some limited period of time, let’s say, five years, with an investment of no more than $10 million to $15 million on our part, we are reluctant,” to invest.